Kestrel Flocks to New CEO
Last week, Woodrow Cannon took the helm of the four-year-old company. Cannon joins after a year's sabbatical following a stint as CEO of Mariposa Technology, which was bought late last year by Marconi Corp. PLC(Nasdaq/London: MONI).
Cannon replaces Marty Kaplan, who had been CEO since June and who will continue to serve as the company’s chairman. Kaplan, in turn, replaced Brian Jervis, who had been CEO since August 2000 when he took over the job from founder Mike Rowan.
Needless to say, Kestrel has undergone its share of changes over the past year. In July, it underwent a thorough reconfiguration, laying off a significant number of employees, closing a small acquisition, and naming Kaplan as the interim CEO (see Kestrel Quietly Reconfigures).
In August, Kaplan removed the "interim" from his "Interim CEO" title, to become the fulltime CEO. At that time, the company also looked to be focusing on using its FDM technology to build subsystems (see Kestrel Takes Another Turn).
Kestrel has been searching for a market for its FDM technology, which crams multiple streams of traffic into a single optical wavelength. This is in contrast to DWDM (dense wavelength-division multiplexing) technology, which crams multiple wavelengths into a single optical fiber strand.
“They seem to be constantly shifting direction,” says David Gross, an analyst with Communications Industry Researchers Inc. He notes Kestrel has positioned itself as a systems company, then a subsystems company, and now a systems and subsystems company whose technology integrates with WDM.
But Cannon insists such strategic changes are part of a young company’s maturation. “These adjustments are typical when you’ve got an exciting new technology,” he says.
The company may still have time to pull it off. It has raised as much as $300 million in venture funding and may well have a substantial amount of that left.
Cannon and other officials say Kestrel has a revenue-generating RBOC (regional bell operating company) customer for its TalonMX optical transport product. Cannon declines to give the customer name because he says RBOCs insist that the relationship be kept confidential. But industry sources are confident that the customer is SBC Communications Inc. (NYSE: SBC). Gross believes the SBC contract is in the $10 million to $20 million range.
Kestrel claims its technology will cut the per-mile cost of transmitting bits in metro areas. “We’ve really revolutionized the equation,” says Cannon. He adds his product has a “strong possibility” of being tried by another RBOC within the next couple months. But he admits that at least a couple months of rigorous testing precedes any chance of revenue from that customer.
A boasting point of FDM is its ability to transmit data at up to 10 Gbit/s over low-grade fiber, as opposed to TDM (time-division multiplexing), which requires high-quality fiber. But Gross believes the FDM technology, which is positioned for the metro market, is way ahead of its time, thanks to the abundance of high-quality fiber. Another issue facing FDM, which is also used by rival Centerpoint Broadband Technologies Inc., is a current lack of standards.
To add to the confusion, Kestrel doesn’t disclose information about its financials, employee headcount, or product roadmap. Gross thinks the company has raised around $300 million in venture capital, and Cannon admits that figure is in the ballpark.
— Tom Davey, special to Light Reading, http://www.lightreading.com